Layoffs: Employers Refresh Their Memory on WARN, OWBPA


By Allen Smith February 20, 2015

With the economic recovery, many employers “are out of practice” with the Worker Adjustment and Retraining Notification (WARN) Act and Older Workers Benefit Protection Act (OWBPA), according to Stephen Roppolo, an attorney with Fisher & Phillips in Houston and San Antonio.

But some HR departments are now clearing the dust off reduction-in-force requirements as many oil and gas businesses in Texas undergo layoffs.

And the layoffs may become more widespread. For example, “If job losses continue, it will affect real estate,” Roppolo predicted.


“If you don’t have 100 employees, you don’t have to worry about” the federal WARN Act, Roppolo observed. Under the law, employers count to see whether they have 100 or more employees working 20 hours or more a week for at least six months, he told SHRM Online.

Roppolo recalled a riverboat casino that shuttered before it opened its doors. Hundreds of employees were laid off, but none had been with the company for more than six months, so the employees weren’t covered by the WARN Act.

The WARN Act requires 60 days advance notice of a layoff “for a soft landing,” he noted; no severance is required.

Some employers are reluctant to give 60 days’ notice because they are concerned about the impact the notice will have on remaining employees’ productivity and morale, Roppolo said. They don’t want employees jumping ship or spending their days looking for greener pastures. However, he called these concerns “misguided” when those left behind are happy to still be employed.

Roppolo said the WARN Act’s notice requirement is triggered if 50 or more employees are laid off in a 30-day period and these employees make up at least 33 percent of the employer’s workforce where the layoff occurs. It also is triggered if 500 or more employees are laid off. If there are multiple related layoffs, the number of laid-off employees is counted during a 90-day period.

Although the WARN Act is commonly associated with manufacturing plants, “it could be a grocery store, retail, office or law firm,” observed David Barron, an attorney with Cozen O’Connor in Houston. “Law firms have been sued many times. It could be any business.”

And it could be confined to a distinct part of the facility, such as an assembly line, accounting department or back office, Barron added.

Not everyone in a facility needs to be notified, just those affected, Roppolo said. The WARN Act also requires notice to state dislocated worker units and the chief elected officials of local governments.

There is a faltering company exemption, but relying on it “makes me nervous,” Roppolo said. The exemption requires that the business be looking for financing when it would have been giving notice, and courts have been strict about that requirement—looking for financing 45 days rather than 60 days in advance of the layoff, for example, may not suffice.


Selecting which employees to lay off is tricky enough, but Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act and OWBPA make it that much more difficult. A layoff may not discriminate based on race, sex, disability, or age for employees who are 40 years or older.

Before selecting who goes, it’s a good idea to develop objective criteria for what makes someone good enough to keep, Roppolo remarked. “It’s much better to decide on the criteria first,” rather than the individuals, he said.

Criteria might range from seniority to attendance to performance review ratings, or some combination of these factors, for example.

When a layoff involves two or more employees, if the company will offer a severance agreement to obtain employees’ waiver of discrimination claims, the employees have 45 days to review it, Barron said. (If the layoff involves just one employee, that person has only 21 days to review the agreement.) And he noted that an employee has seven days to revoke the agreement even after signing it.

The laid-off workers must be told the job titles and ages of all laid off, so that—armed with this information—the employees can be better informed when deciding whether to sign the severance agreement and waive their age discrimination claims, Barron observed.

“Look at the numbers before you pull the trigger to see if anything jumps off the page,” he said. If 10 percent of employees are black and 70 percent of those black employees are being laid off, or if women are 50 percent of the workforce but 78 percent of those laid off, there may be an unlawful disparate impact. “There might be a good reason” for the disparate impact, such as if a department being closed has all female employees, Barron said. But know in advance what the numbers are so you aren’t blindsided.

While employers can’t get a release of wage and hour claims, they can get an admission that the employees are not aware of any overtime owed to them, which can help challenge their credibility if they sue, he added.

Smaller companies can eyeball the numbers, while larger companies need to run the statistics, Barron said.

Companies need to dot all i’s and cross all t’s on OWBPA language for a lawful release, Roppolo said. Once the objective criteria has been applied to select who will be laid off, the hard work of implementing the layoff remains.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

Related Article:

Falling Oil Prices Prompt Surge of Job Cuts, SHRM Online, February 2015


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